The Grammy Award-winning album packaging was created by art director Robert Fraser, mostly in collaboration with McCartney, designed by Peter Blake, his wife Jann Haworth, and photographed by Michael Cooper. It featured a colourful collage of life-sized cardboard models of famous people on the front of the album cover and lyrics printed on the back cover, the first time this had been done on an English pop LP. The suits were designed by Manuel Cuevas. Among the insignia on their uniforms are:

Ontario Provincial Police flash on McCartney's sleeve Art director Robert Fraser was a prominent London art dealer who ran his own gallery and sponsored exhibitions at the Indica Gallery, through which he had become a close friend of McCartney, and it was at his strong urging that the group abandoned their original cover design, a psychedelic painting by The Fool. The Fool's design for the inner sleeve was, however, used for the first few pressings.

According to Blake, the original concept was to create a scene that showed the Sgt. Pepper band performing in a park; this gradually evolved into its final form, which shows the Beatles, as the Sgt. Pepper band, surrounded by a large group of their heroes, rendered as lifesized cut-out figures.

The collage depicted more than 70 famous people, including writers, musicians, film stars and (at Harrison's request) a number of Indian gurus. The final grouping included Marlene Dietrich, Carl Gustav Jung, W.C. Fields, Diana Dors, Bob Dylan, Marilyn Monroe, Aldous Huxley, Karlheinz Stockhausen, Sigmund Freud, Aleister Crowley, Edgar Allan Poe, Karl Marx, Oscar Wilde, William S. Burroughs, Marlon Brando, Stan Laurel and Oliver Hardy, and controversial comedian Lenny Bruce. Also included was the image of the original Beatles bass player, the late Stuart Sutcliffe. Pete Best said in a later NPR interview that Lennon borrowed family medals from his mother Mona for the shoot, on condition he not lose them. Adolf Hitler and Jesus Christ were requested by Lennon, but ultimately they were left out.